Ansys, a diversified digital technology solutions provider, on Wednesday reported a 29% drop in revenue for the year ended 31 March 2018, to R572.6 million.
Operating profit declined to R46.5 million, from R100 million previously, Ansys, which recently rebranded as Etion, said.
“The decline in financial performance can be attributed mainly to budget revisions by key customers in response to adverse macro-economic factors. The impact of the exceptional exchange gain in 2017 (R17.4 million) as opposed to R7.8 million in the current period also contributed to reduced profitability,” Ansys said.
- Gross Margin improved to 28.3% (2017: 26.3%)
- Headline Earnings per share halved (50% down) to 7.29 cents
- EBITDA reduced (down 46%) to R60.7 million
- Liquidity ratio improved from 1.7 to 2.1
Ansys said that operational expenses which came in at R125.8 million, were 3.5% lower than they were in the previous year (2017: R130.3 million), even though this figure includes expenses of R8.2 million related to strategic investments. “These investments were made to create new group capability to support the growth strategy,” it said.
The group said the telecommunications segment experienced a significant slowdown in the roll-out of FTTH (Fibre-to-the-home) by some of the network operators, following the upsurge in demand in the previous financial year. “The moderation in activity was largely driven by key customers reviewing their infrastructure budgets due to a macroeconomic slowdown.”
As a result, revenue dropped by 38% to R266.4 million, and profit decreased from R82.2 million to R27.6 million. The segment’s profit margin declined from 19.2% to 10.4%.
“Despite the low profit performance, the telecommunication business improved efficiencies and reduced inventory levels by 28%. Overall liquidity improved from 1.4 to 2.5,” Ansys said.
The group said that the immediate outlook for the South African economy remains cautious, although medium-term prospects have improved since late 2017. This is primarily due to notably less concern about domestic politics and the policy environment, as well as to the recent confirmation of the country’s investment grade rating by Moody’s.
At a group level, Ansys said it has recently positioned itself as a diversified digital technology group.
“With the extended opportunities that greater integration at operational level will provide – we anticipate a steadily increasing demand for Etion’s products, services and solutions. We are also continuing to explore suitable acquisitions and to focus on expansion into sectors and segments, which will support growth in revenue.”
“We anticipate that the intensifying disruptions caused by the digital revolution, the exponential growth in the Internet of Things (IoT) and the related threat of increasing cyber-crime will create a greater demand for the integrated solutions that the group is able to offer. Local demand across the current three segments, and the most recently introduced segment, cyber security, is therefore expected to be healthy,” it said.